In Former Hummer Plant in Indiana, Mercedes Turns Out S.U.V.s for China

MISHAWAKA, Ind. — The steady comeback of the American auto industry has brought new life to underused factories, as carmakers across the country add shifts of workers to meet growing demand for new vehicles.

But even in an industry on the rebound, the revival of a once-empty plant in northern Indiana stands apart.

On Tuesday, officials of AM General — the maker of Humvee military vehicles — celebrated the production of a Mercedes-Benz sport utility vehicle in a sprawling factory that once built Hummer S.U.V.s for General Motors.

The plant was idle for years after G.M. went bankrupt in 2009 and had to shut down its Hummer brand and shrink other operations as a condition of its $49 billion government bailout.

At the time, it appeared that the factory in this city of 48,000 might be another casualty on the long list of auto plants that closed their doors permanently in the last recession.

Yet in an unusual turn of events, the old Hummer plant has been resurrected and, in the process, become an example of how a modest-size Rust Belt manufacturer can find its niche in an increasingly global automotive industry.

AM General’s hourly workers, who belong to the United Automobile Workers union, are building the German luxury S.U.V.s for a specific clientele: consumers in China.

While a number of American auto plants export their products around the world, the factory is believed to be the only plant in the United States that ships its entire volume for sale in the Chinese market. Like other automakers, Daimler is not backing off its plans for China despite a recent sales slowdown there.

“We are making German luxury vehicles in Indiana for export to China, and doing it with workers at the oldest U.A.W. local in the nation,” said Howard B. Glaser, head of AM General’s commercial division. “You basically have the entire global economy under one roof.”

The plant’s revival is only one piece of what has become a vibrant American auto manufacturing sector.

The number of American-made vehicles exported to other countries has grown to more than 2.1 million in 2014, more than doubling from just over 1 million in 2009, according to federal data from the Commerce Department’s International Trade Administration.

Exports to China have particularly skyrocketed, jumping to 305,000 last year from barely 25,000 vehicles in 2009.

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With global sales of S.U.V.s soaring, Mercedes has contracted with a U.S. manufacturer in Indiana to increase its production capacity.Published OnAug. 11, 2015

According to the Center for Automotive Research, overall American vehicle production hit 11.66 million last year, up from 11.07 million in 2013. Bernard Swiecki, assistant director of the center’s Automotive Communities Partnership, said that with auto sales booming, it was not surprising that factories that survived the downturn were now roaring.

“It’s pure supply and demand,” Mr. Swiecki said. “The automakers have to produce vehicles for a robust market, and so they’re squeezing every bit of production they can out of these locations.”

In 2010 and into 2011, the center estimates that capacity utilization at North American auto plants — including Canada and Mexico — had fallen to about 70 percent, he said. In 2012, when the recovery began, that rose to 91 percent — and last year, it grew to 96 percent.

Mr. Swiecki said that Mercedes-Benz’s plans for the factory in Indiana was a sign of an industry with the wind at its back.

“In a good economy like this, that plant is going to be very, very busy,” he said.

The workers at the plant, many of whom had endured long layoffs in recent years, are grateful to be back on the assembly line — and proud of their plant’s status as a full-time exporter.

“You do quality work and people will want to pay for it, no matter where they are from,” said Jason Smith, a worker at the plant for 11 years.

About 350 hourly workers staff the plant, down from a high of 1,000 employees during the glory days of the gas-guzzling Hummer brand at G.M.

While it may not be operating at full capacity, the factory has become a bright spot in the Indiana economy, which lost many manufacturing jobs in the last recession.

The nearby city of Elkhart, for example, lost thousands of manufacturing jobs in the recreational vehicle industry, and unemployment rates in the area approached 20 percent.

The AM General plant was only eight years old when G.M. went bankrupt.

“Those were very tough times,” said David Whitby, who heads commercial manufacturing for AM General. “We went from having about 1,000 workers in the plant down to just about zero.”

Some of the laid-off workers at AM General transferred to the company’s military vehicle facility next door to the Hummer plant. But job security was tenuous there as well.

“We just had to keep moving forward and hoping for the best,” said Velgean Daniel, who has worked for the company for 15 years.

The plant started its slow recovery in 2011, when it began building limited volumes of a handicapped-accessible van created by a start-up company called MV-1.

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Many workers at the plant had endured long layoffs in recent years.CreditAndrew Nelles for The New York Times

Production was too small to allow AM General to begin recalling the bulk of the laid-off workers. And the plant itself was considerably larger than was needed just for the MV-1.

A huge opportunity was on the horizon, though, as the auto industry in the United States started its revival.

The German automaker Daimler, the parent company of Mercedes-Benz, was running short on production capacity for S.U.V.s at its factory in Alabama.

Last year, Mercedes officials started scouting for other possible sites to build one of the plant’s S.U.V. models, the R-class.

The R-class had never caught on with American consumers, and sales in the United States were discontinued a few years ago. But the sleek, station-wagon-shaped model was a hit in China, and Mercedes was determined to keep building it.

Jason Hoff, the head of Mercedes operations in the United States, said it was not practical to relocate the supply base for the R-class from North America to China. “That would have been far too expensive,” he said.

Instead, Mercedes signed a multiyear contract to have AM General assemble the R-class in Mishawaka, using parts shipped into the facility from suppliers throughout North America and Europe.

“They had a lot of experience here and a very good work force,” Mr. Hoff said. “And the facility is very flexible and can integrate our product quite well.”

An AM General spokesman said the company did not need any financial incentives from state or local government to retool the plant for the new model.

Now, the plant is building between 70 and 100 vehicles a day, mostly R-class S.U.V.s as well as a small number of MV-1 vans.

There is enough space for more models in the plant, and Mr. Glaser of AM General said the company was hoping other manufacturers might send it products they could not build on their own.

Mishawaka’s mayor, David Wood, said the turnaround at the plant had had a profound impact on his community, and not just because much-needed jobs and paychecks have returned.

“This is just a real momentum-builder for us and for the region,” he said. “The auto industry has a long history here going all the way back to Studebaker, but bringing in Mercedes really puts us on the map.”

Aaron M. Kessler contributed reporting from Washington.

A version of this article appears in print on , on Page B2 of the New York edition with the headline: Global Trade Revives an Auto Factory Gone Silent in Indiana . Order Reprints | Today’s Paper | Subscribe

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